Citi and a Cartel of Global Banks Fined $1.2 Billion By EU over FX Market Rigging

I wanted to call your attention to this story about brazen manipulation in the forex exchange markets by the Banks for three reasons:

1. The markets are too large to be manipulated. When accusations of market manipulation are made, spokesmodels and apologists will dismiss them by saying 'the market is too big to be manipulated' and then cite some gross total of the market trade. This is utter baloney and they know it. Prices are set at the margins, not on the whole, and there is no market that is too big to be manipulated in some manner by big enough players.

2. The government is the problem. If there was a free market you would not see any manipulation. Get rid of all government involvement. This is such a howler that I won't even waste many words on it, except to say that this sophistry implies that if we eliminated the law, then there would not be any crime.  This is utopian nonsense, repeated as slogans by those who have stopped thinking for themselves.

3. The Banks are too well regulated to manipulate markets.  It is the same big banks that are involved in these market manipulation schemes, again and again. They are serial felons who always blame each instance of the felony crime to some 'rogue element' or isolated trader, which is also nonsense. And in each case the fine, while nominally large by individual standards, is really just a cost of doing business.

These market manipulation schemes will end when people reject the narratives put forward by the Bankers and their enablers and think tanks, and choose to elect people who are serious about financial and political reform.

At some point the long term price/physical manipulation in the gold market is going to blow up, and no one in authority could have seen it coming. Because their eyes are firmly closed and gaze averted.

And Trump is no different from his predecessors, and in some ways may be worse.

"Citigroup Inc.[aka Dr. Evil], Royal Bank of Scotland Group Plc and JPMorgan Chase & Co. are among five banks that agreed to pay European Union fines totaling 1.07 billion euros ($1.2 billion) for colluding on foreign-exchange trading strategies.

Citigroup was hit hardest with a 310.8 million-euro penalty, followed by fines of 249.2 million euros and 228.8 million euros for RBS and JPMorgan, the European Commission said in a statement on Thursday. Barclays Plc was fined 210.3 million euros and Mitsubishi UFJ Financial Group Inc. must pay nearly 70 million euros as part of the settlement with the EU’s antitrust regulator.

Traders ran two cartels on online chatrooms, swapping sensitive information and trading plans that allowed them to make informed decisions to buy or sell currencies, the regulator said. Many of them knew each other, calling one chatroom on the Bloomberg terminal the "Essex Express n’ the Jimmy" because all of the traders but one met on a commuter train from Essex to London. Other names for rooms were the "Three Way Banana Split" and "Semi Grumpy Old Men."

"Foreign exchange spot trading activities are one of the largest markets in the world, worth billions of euros every day," EU Competition Commissioner Margrethe Vestager said. "These cartel decisions send a clear message that the commission will not tolerate collusive behavior in any sector of the financial markets."


...The effects of the EU decision on banks will be “relatively mild, because the fines aren’t huge,” said Aitor Ortiz, an analyst at Bloomberg Intelligence. Referring to the third probe involving Credit Suisse, he said “we may still have to wait another year” to see the decision, because the bank has refused to join a settlement that would grant lower fines.

Traders exchanged information about outstanding customers’ orders, bid-ask spreads, their open-risk positions and details of current or planned trading activities. They would sometimes agree to "stand down" or stop a trading activity to avoid interfering with another trader in the group. They traded 11 currencies, including the euro, the U.S. dollar, the British pound and the Japanese yen...

Read the entire story here.

Stocks and Precious Metal Charts - The Darkness Rising - Twilight of Those Who Would Be Gods

"At dæmon, homini quum struit aliquid malum,
Pervertit illi primitus mentem suam."

But when the devil intends any evil against man, he first viciously corrupts their mind.

Euripides


"Nimirum insanus paucis videatur, eo quod
Maxima pars hominum morbo jactatur eodem."

He appears mad indeed but only to a few, because many are infected with the same disease.

Horace


"Though this be madness, yet there is a method in it."

Shakespeare, Hamlet, Act 2, Scene 2.

The retail sales number came in rather badly this morning.

There is no real recovery. Just a papering over of the rot endemic to oligarchy.

Gold and silver are struggling at overhead resistance.

Gold is much more interesting to watch here because of its nature as a safe haven.

And of course its central role in the changes in the monetary regime which have been called currency wars.

Stocks have reached the 38.2% fibonacci retracement level. They may keep on reaching for 50%.

It is reported that JP Morgan is holding $2.3 trillion in stock derivatives, or roughly 2/3rds of the entire market.

Let's see how this charade plays out.  My general forecast is for pain.

When intelligent, verbally acute narcissists start succumbing to continuing pressure they typically become paranoid, and then violent.   The mechanism for this is reasonably straightforward.

Their pathology is expressed in grandiose self-images and imagined and great exaggerated accomplishments.   When they fail to achieve their lofty goals, they start blaming others. Their narcissism turns malignant.

After all, in their minds they are fabulously talented and have never failed or even made a serious mistake.   So if there is failure, it cannot possibly be due to anything that they have done, but rather the failure of those who work for them.  And so there is a great deal of staff turnover.

And if the failures continue, there must certainly be some group that is sabotaging their efforts, in an effort to make them look bad.  Eventually their rage and words translate into acting out, and violence, most often against critics, potential critics and scapegoats.

There might be an epidemic of this sort of thing in the Beltway.

And then the darkness comes.

Have a pleasant evening.

Stocks and Precious Metals Charts Hang On To Your Hats - Gold Working 'W' Bottom on Big Cup Handle

“When an honest man speaks, he says only what he believes to be true; and for the liar, it is correspondingly indispensable that he considers his statements to be false. For the bullshitter, however, all these bets are off: he is neither on the side of the true nor on the side of the false.

His eye is not on the facts at all, as the eyes of the honest man and of the liar are, except insofar as they may be pertinent to his interest in getting away with what he says. He does not care whether the things he says describe reality correctly.  He just picks them out, or makes them up, to suit his purpose.”

Harry G. Frankfurt, On Bullshit

Yesterday I said, "We may get a tweet fueled rebound of sorts. But it is unlikely to last."

We may get a little more upside, if Trump-o-weenie puts out more fantasy tweets about a trade deal, and Mnuchin mobilizes the Exchange Stabilization Fund.

But, the risks remain elevated, highly elevated.

Gold hung in there today, despite a little profit-taking and a stronger dollar.  We may have put in a 'W' double bottom.   Let's see if that formation can activate on the chart.

Bloomberg *finally* fixed their intraday DX chart. Thank you guys. They have an excellent organization when it comes to collecting, organizing and presenting data.

As for the big picture, the 'recovery' may be faltering, the world may be teetering on the verge of economic stagnation, the US may be aggressively pursuing regime change in multiple countries, but at least the deficit is out of control, thanks in large part to the tax cuts for corporations and the ultra-wealthy.

As for the rest of us and these markets, hang on to your hats. We may be in for a rough ride.

Have a pleasant evening.

Stocks and Precious Metals Charts - Oh the Bovinity! - Flight to Safety - Stock Option Expiration Friday

"While everyone enjoys an economic party the long-term costs of a bubble to the economy and society are potentially great. They include a reduction in the long-term saving rate, a seemingly random distribution of wealth, and the diversion of financial human capital into the acquisition of wealth.

As in the United States in the late 1920s and Japan in the late 1980s, the case for a central bank ultimately to burst that bubble becomes overwhelming. I think it is far better that we do so while the bubble still resembles surface froth and before the bubble carries the economy to stratospheric heights. Whenever we do it, it is going to be painful, however.”

Larry Lindsey, Federal Reserve Governor, September 24, 1996 FOMC Minutes


“I recognise that there is a stock market bubble problem at this point, and I agree with Governor Lindsey that this is a problem that we should keep an eye on....We do have the possibility of raising major concerns by increasing margin requirements.  I guarantee that if you want to get rid of the bubble, whatever it is, that will do it.”

Alan Greenspan, September 24, 1996 FOMC Minutes


"And in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are built into the system are operational, when in fact they're not. And what you're going to see and what we are seeing is it'll be a breakdown of those governmental institutions. And you'll see governments that continue to have policies that feed the interests of -- and I don't want to get clichéd, but the one percent or the .1 percent -- to the detriment of everyone else."

Neil Barofsky, 2012 interview with Bill Moyers

Stocks were in meltdown mode, relatively speaking, to the insouciance with which they have greeted most negative economic news this year.

That recovery on Friday reeked of bravado and phoniness.  But it went less noticed because there is so much of that going around lately.

There was special coverage and a wave of happy talk this morning on bubblevision, that seemed to fade into quiet desperation and calls for a rate cut to rescue the markets.

But there was really no panic, despite the fact that both of the gaps in the equity indices have now been filled, as we had suggested that they would be.  For this is no breakaway gap in a booming economy.  This was a gap in a highly cynical, very technical, asset bubble following the debacle in December.

Gold was a clear beneficiary of this, banging up to the $1300 level.   The dollar and silver were both fairly flat.

We may get a tweet fueled rebound of sorts.  But it is unlikely to last.

There will be a stock market option expiration on Friday.

Just a quick mention as the eight year saga of Game of Thrones staggers to a close. A friend of ours sent us the following diagram of the series from China, which is included below. It is remarkably insightful. I have seen other versions floating around the circles where these things are discussed.

I am given to understand that the writers for these last few seasons of GoT are moving on to become the writers of a new Star Wars trilogy.

Need little, want less, love more.  For those who abide in love abide in God, and God in them.

Have a pleasant evening.